Before: Traditional owner Harold Ashburton at Juukan Gorge in 2015. Credit:PKKP and PKKP Aboriginal Corporation
Burchell Hayes was driving from Port Hedland to Karratha in Western Australia on a long road where the sky looks boundless and the red earth, anchoring it to the landscape, stretches far beyond where the eye can see.
Four of his grandsons were in the car with him. Their presence made the news he was about to hear even harder to take in.
It was May 24, 2020 – exactly a year ago this Monday – and miner Rio Tinto had just set off a series of explosive charges at a place called Juukan Gorge, named after Hayes’ grandfather and sacred to his people. Two rock shelters there contained some of the world’s oldest evidence of continual human habitation and priceless cultural heritage. They had been blasted through and reduced to rubble.
PKKP director Burchell Hayes, pictured here near Juukan Gorge, says laws can reflect spiritual values. Credit:PKKP
“It felt really terrible, as a grandfather,” Hayes recalls, “to know that I was not able to preserve the heritage which was on loan to me.”
For corporate Australia, 2020 will go down as a year like no other: the coronavirus crisis crippling swathes of the economy, business closures everywhere, widespread job losses.
For the nation’s mining companies – and the legions of institutional investors who hold shares in them – it will also be remembered for another reason: the year the industry was rocked by one of the biggest scandals in recent memory.
The legal destruction of the 46,000-year-old rock shelters at Juukan Gorge devastated their traditional custodians, who describe their connection to the land as “strong, direct and ancient” and who were unaware of Rio’s plan to destroy them until it was too late. Over the course of 2020, the fallout focused the public spotlight on miners’ treatment of Indigenous peoples across the industry and lit a match beneath long-simmering concerns about the power imbalance that underpins those ties. It triggered protests and parliamentary hearings. Projects were paused across the industry and there were promises of legislative reform. While the fight is far from over, many now hope 2020 could be a turning point that changes forever how the mining sector – and Australia – treats its First Nations custodians.
In the days that followed the destruction, the intense pain felt by Hayes and the wider Puutu Kunti Kurrama and Pinikura (PKKP) community reverberated rapidly through the country, and then around the world.
The news made it all the way to the offices of Doug McMurdo, who chairs a coalition of 82 British pension funds managing $545 billion and became one of the first global investors to start seeking answers from the Anglo-Australian miner.
While he didn’t know it at the time, what transpired would become a “rallying point for investors around human rights”, and, specifically, the cultural rights of Indigenous peoples worldwide.
“The destruction of the rock shelters has certainly opened my eyes further, not just to Rio Tinto’s community-engagement practices but to the fact that these practices are largely deficient across the entire mining industry,” McMurdo, the chair of Local Authority Pension Fund Forum chairman, tells The Age and The Sydney Morning Herald.
“The way investors and traditional owners came together to ensure there were consequences for Rio Tinto’s actions was heartening.”
The response McMurdo refers to was powerful and effective. Investment firms and First Nations leaders spoke publicly in the media, and, privately, pressured the board demanding answers and action. Rio Tinto was forced into an urgent review. It found multiple communication failures and “missed opportunities” that would have prevented the disaster, and the company apologised for this profusely. But its proposed punishments – docking the bonus pay of CEO Jean-Sebastien Jacques and two of his deputies – failed to quell the outcry and calls for accountability grew louder. In the end, it would cost the jobs of all three executives. Chairman Simon Thompson is standing down shortly. And now, the world’s biggest iron ore miner is confronting the task of rolling out large-scale changes, rebuilding relationships and mending a reputation in tatters.
“This will not be easy,” Rio’s new chief executive Jakob Stausholm acknowledges. “This is the start of a long journey.”
Before the first anniversary of the disaster this Monday, investors involved in last year’s uprising have offered their reflections – recounting their shock at what happened, the lessons to be learnt and what must be done differently to prevent anything like this from happening again.
A long-running theme in the investment world is that money managers have been placing exponentially more importance on how companies manage environmental, social and governance risks – referred to as “ESG”. In mining, much focus has centred on companies’ contribution to global warming, both for the emissions caused by miners’ operations and for the carbon footprint of the fossil fuels they dig up and sell around the world. When it came to “social” risk, however, even the most ESG-minded investors deemed Rio among the best performers for its relationships with Indigenous peoples. It had been the first to recognise native title 30 years ago.
“We understood them to be a leader in the space of native title arrangements, and if you read their reconciliation action plan and all of their public statements it looked to be that they were the ones to follow,” says Mary Delahunty, the head of impact at the $60 billion fund HESTA, which has shares in Rio.
“We thought we had an understanding of the way those organisations dealt with native title holders through their public statements. But this was incredibly eye-opening.”
Clearly, there was an “integrity gap” between what Rio was saying and what it was doing, Delahunty concludes. If this was happening at Rio, what was happening elsewhere? Her team checked the fund’s wider portfolio and probed the practices of 14 other mining-sector companies it held – how did they conduct their business with native-title holders, how did they strike agreements, were they doing enough to check with traditional owners that their “free, prior and informed” consent remained?
“We were left with the impression that the risks were systemic,” Delahunty recalls.
Some investors including HESTA are now in regular communication with traditional owners, including the PKKP, to gain visibility of what is occurring and not solely rely only on companies’ public statements. “We won’t do that again,” she says. “This is a line in the sand.”
For the mining and investment communities, the loss of the Juukan shelters has been an unmistakable “wake-up” call. In October, a coalition of investment giants managing $14 trillion of assets including Fidelity, the Church of England Pensions Board, Legal & General and local groups wrote to all of Australia’s top miners demanding assurances about their relationships with First Nations stakeholders.
The Australian Council of Superannuation Investors (ACSI), whose 37 members own on average 10 per cent of every ASX200 company, was one of the signatories and is helping lead a collaborative approach to the problem.
“Institutional investors are working together to go to all of the mining companies that have these exposures to say, ‘How are you managing these risks?’ and ‘we are going to be watching over the coming years to see how you further develop your systems to make sure things like this would not happen on your watch’,” ACSI chief Louise Davidson says.
“Investors have always seen this as a risk ... but will now be paying much closer attention.”
A good deal of this attention will be directed squarely on Rio and how its new CEO Stausholm and head of Australia, Kellie Parker, are seen to be responding to the enormous challenges ahead.
In the face of criticism that part of Rio’s problems stem from its losing touch with Australia, the country that accounts for more than 80 per cent of its earnings, Parker’s appointment appears a sound one.
Rebuilding trust: Rio Tinto’s chief executive Australia Kellie Parker.
Parker grew up in the Pilbara town of Wickham, where her parents were the town’s pharmacists. She went to Curtin University in Perth to study occupational therapy, before joining Rio in 2001 as an injury-management adviser.
After several safety and operational roles, Parker rose through Rio’s ranks to become managing director of the Pilbara Assets and Development team in 2014 and then, in 2018, managing director of Rio’s Australasian aluminium assets, based out of Brisbane.
She cares deeply about the company, having worked there for 20 years, but speaks candidly about the shame she felt at the Juukan Gorge disaster.
“I was proud to wear the shirt, I was proud to tell my family and friends who I worked for … so what happened last year was devastating for me personally,” Parker says.
“I was confused when I first heard the news, because I couldn’t believe what we were doing and then really, really deeply upset by what we had done. I am so motivated to get back that pride for many of our employees.”
Since stepping into Rio’s newly created “CEO Australia” role in March, Parker has embarked on a national listening tour, which has taken her from big city boardrooms to outback community meetings.
While the miner’s attempts at redemption have been dismissed by some as being more talk than action, Parker insists this is how restoring trust begins, and appears confident Rio has taken the right approach. Important lessons are being channelled straight to its executive committee, she says, so they can be applied to other parts of the business, including Rio’s nascent plans to develop a giant copper mine in the United States, which are facing objections from Apache people.
“I have listened to some of the most fierce critics and understand what we’ve got to do to change,” Parker says.
For the institutional investors vowing to hold Rio to greater account, the approach from Parker and Stausholm and their commitments to restore and improve traditional owner relationships have, so far, been encouraging.
“It looks like it’s heading in the right direction,” HESTA’s Delahunty says. “But the proof now will be in the doing.”
Doug McMurdo at the LAPFF agrees, sensing “significant cultural change” under Rio’s new management team: “However, it will take more time to see if these changes result in positive human rights outcomes.”
Among Rio’s reforms so far is forming an Indigenous advisory group to point out gaps in its cultural-heritage protocols, ensure a better understanding of Indigenous needs across the business and providing a “clear pathway” to re-establish trust over time. It has also vowed to increase transparency in its approach to cultural heritage, including how views of traditional owners’ views are sought and considered.
Hayes, a director of the PKKP Aboriginal Corporation, wants to see more engagement and communication between mining firms and traditional owners.
“We are not opposed to mining, however we want to ensure that we are around the table when it comes to making decisions about impact on our country,” he says.
One finding from the federal inquiry into the disaster was that Rio had canvassed alternative options to expand their mine, which, although less-profitable, would have avoided impacting the rock shelters. But it never informed the PKKP about them.
If better ties had existed, and Rio Tinto had more thoroughly engaged with traditional owners, Hayes believes the Juukan rock shelters might still be standing.“It’s proof that our ancestors occupied this area for 46,000 years,” Hayes says. “That opportunity was taken away from us when it came to sharing our culture, our heritage and the significance of this site to our future generations. This could have been prevented.”
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Business reporter for The Age and Sydney Morning Herald.
Tess Ingram is a journalist with WAtoday. She was previously a reporter in The Australian Financial Review's Perth bureau, covering business, economics and politics.
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